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Harmony Gold lifts Q1 profit, output

Publication: Mining Weekly
Journalist: Chanel Pringle

JOHANNESBURG ( – South African gold producer Harmony Gold has improved its net profit, despite higher operating costs impacting on its cash operating profit.

The company, led by CEO Graham Briggs, on Friday reported an improvement in its net profit to R402-million for the September quarter, compared with a net loss of R71-million in the previous quarter.

This was up from a net loss of R566-million for the quarter ended September 2007.

Earnings a share, however, declined by 63% to 24c a share for the quarter, compared with 65c a share for the year ended June 30, 2008.

Interim financial director Frank Abbott stated during a conference call that while the company had boosted its gold production by 6%, this was offset by a lower gold price.

Further, a 15% quarter-on-quarter increase in operating costs, combined with the lower gold price resulted in the cash operating profit declining by 19% to R808-million, compared with R995-million in the previous quarter.

Operating costs increased by R249,2-million, owing mainly to higher electricity and labour costs.

Electricity costs had increased by 43% during the quarter, owing to Eskom's 20% tariff increase and higher winter tariffs. However, Abbott noted that the winter tariffs would not apply to the next quarter.

Further, the company's labour costs increased by 13% during the quarter. Abbott noted that there were also some other one-off costs that would not be repeated in the next quarter.

However, he said that with the commodity prices coming down, Harmony was trying to reduce the prices from its suppliers.

Meanwhile, Briggs noted that there was still a lot of evidence that gold remained a mainstay and that the fundamentals of the gold market were still positive in the medium- to- longer term.

He said that while the gold market volatility was likely to continue, the gold price was also likely to increase in future, as supplies of new gold continued to decline, fewer gold discoveries would be made and junior and exploration companies found it difficult to find funding.

Briggs stated that the company's average gold price had only declined by 3% to $869/oz during the quarter, compared with $897/oz in the previous quarter, despite the volatility in the market.

Meanwhile, Harmony Gold aimed to reduce its net debt to R224-million by June 2009, saying that this was assuming a gold price of R220 000/kg and the disposal of its Rand Uranium assets at an exchange rate of R10/$.

Abbott noted that the company had already been reducing its net debt, which stood at R2,35-billion at the end of the quarter.


Meanwhile, Briggs said that improving the safety at its operations remained a critical priority as seven employees had died in six incidents during the quarter.

Four employees had died in the quarter before.

Briggs noted that a single fatality resulted in a loss of production of about 30 kg/d. He added that an operation would also be closed down for up to two or three days for each fatality.

Annual report

Integrated annual report 2016
Integrated annual report 2017


Investor brief

Harmony Investor brief, Sep 2017
September 2017 -
Harmony Investor brief

(PDF - 6.5MB)

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